Lesson 10

Question 1

Employee share/purchase stock ownership plan

Answer 1

a plan whereby a trust is established to hold shares of company stock purchased for or issued to employees
The trust distributes the stock to employees on retirement, separation from service, or as otherwise prescribed by the plan
Org-wide incentive

Question 2

Fixed pay

Answer 2

Compensation that is independent of the performance level of the individual, group or organization

Question 3

Variable pay

Answer 3

any plan that ties pay to productivity or profitability

Question 4

Fredrick Herzburg and motivation

Answer 4

best way to motivate someone is to organize the job so that doing it provides a challenge and recognition to help satisfy the “higher level” needs
better pay and benefits are “lower level”

Question 5

Edward Deci and demotivators

Answer 5

extrinsic rewards could detract from the persons intrinsic motivators

Question 6

The three components to motivation

Answer 6

Expectancy: a persons expectation that their effort will lead to performance
Instrumentality: the perceived relationship between successful performance and obtaining the reward
Valence: the perceived value a person attaches to the reward

Question 7

Merit pay

Answer 7

any salary increase awarded to an employee based on their individual performance
org-wide

Question 8

Profit sharing plan

Answer 8

a plan whereby most or all employees share the companies profits
“Cash plans” percentage of profits is distributed as profit shares at regular intervals
org-wide

Question 9

Gainsharing

Answer 9

org-wide

an incentive plan that engages employees in a common effort to achieve productivity objectives and share the gains

Question 10

Piecework

Answer 10

operations employee incentive

a system of pay based on the number of items processed by each individual worker in a unit of time

Question 11

straight piecework plan

Answer 11

a set payment for each piece produced or processed

Question 12

Guaranteed piecework plan

Answer 12

the minimum hourly wage play an incentive for each unit produced above a set number of units per hour

Question 13

differential piece rate plan

Answer 13

a plan by which a worker is paid a base hourly rate plus an extra percentage of their base rate for production exceeding the stander per hour or per day
similarly to piecework payment but is based on a percentage premium

Question 14

team or group incentive

Answer 14

a plan in which a production standard is set for specific work groups and its members are paid incentives if the group exceeds the production standard

Question 15

what are the three approaches to team incentives

Answer 15

1. set work standards for each member of the group and maintain a count of the output of each member (all members receive the highest; all members receive the lowest; all members receive an average)
2. set a production standard based on the final output of the group as a whole
3. choose a measurable definition of group performance that the group can control

Question 16

Three basic issues to consider in short term incentives

Answer 16

1. eligibility
2. how much to pay out (fund size)
3. Determining individual award

Question 17

explain eligibility in short term incentives

Answer 17

1. key position: job by job review is conducted to identify the key jobs that have measurable impact on profitability
2. salary level cut off
3. salary grade cut off

Question 18

explain fund size in short term incentives

Answer 18

non deductible formula: straight percentage is used to create the short term incentive fund
duductile formula: assumption that short term incentive fund should begin to accumulate only after the firm has met specified level of earnings

Question 19

expand on determining individual awards in short term incentives

Answer 19

individual award: target bonus is set for each eligible position , a max amount may be set, performance ratings are obtained and the bonus estimates are created
split aware method: manager gets two separate bonuses, one based on performance individual and one on performance company

Question 20

multipilar method

Answer 20

used to correct the split award method so that poor performers don’t get the company bonus

Question 21

Capital accumulation programs

Answer 21

long term incentives

often reserved for senior execs

Question 22

Two long term incentive options

Answer 22

stock share and share units

Question 23

stock option

Answer 23

a long term incentive for execs that is the right to purchase a stated number of shares of a company stock at todays price at some time in the future
most popular long term incentive
a vesting period is required

Question 24

when to use incentives

Answer 24

Performance cannot replace good management 
Firms get what they pay for
Pay is not a motivator
Rewards rupture relationships
Rewards may undermine responsiveness

Question 25

Implementing incentives (7)

Answer 25

Pay for performance
Link incentives to other activities that engage employees in the buisness
Link incentives to measurable competencies
Match incentives to the culture
Keep group incentives clear and simple
Overcommunicate
Greatest incentive is the work itself

Question 26

indirect financial payments given to employees. may include supplementary health and life insurance, vacation, pension plans, education plans, and discounts on company products

Answer 26

employee benefits

Question 27

a federal program intended to provide temporary financial assistance to eligible persons who experience interruption to their work through no fault of their own

Answer 27

employment insurance

Question 28

advance reasonable notice

Answer 28

advance written notice required if the employer is going to terminate employment of a worker without cause.
only applies to worker whose employment is terminated through no cause of their own

Question 29

an additional payout on top of the minimum notice period requirements and only applied if the speiicfed conditions in the applicable jurisdiction are met

Answer 29

severance pay

Question 30

the percentage f expenses in excess of the deductible that are paid for by the insurance plan

Answer 30

coinsurance

Question 31

the annual amount of health/dental expenses that an employee must pay before insurance benefits will be paid

Answer 31

deductible

Question 32

individualized benefits plans to accommodate employee needs and preferences

Answer 32

flexible benefits plan

also has required insurance plans to be included

Question 33

a plan that contains a formula for determining regiment benefits

Answer 33

defined pension plan

Question 34

a plan in which the employers contribution to the employees retirement fund is specified

Answer 34

defined contribution plan

Question 35

a planning which a certain amount of company profits is credited to each employees account, payable t retirement, termination or death

Answer 35

deferred profit sharing plan

Question 36

plans that provide income when employees reach a predetermined retirement age

Answer 36

pension plan 308

Question 37

What are the 7 government mandated benefits

Answer 37

1. EI
2. Workers comp
3. CPP
4. Pay on termination
5. Leave of absence
6. Paid time off

Question 38

What are the 6 voluntary benefits

Answer 38

1. life insurance
2. supplementary health care
3. short term disability
4. long term disability
5. sabbtial
6. retirement benefits

Question 39

what are the three personal services

Answer 39

credit unionts
councelling services
employee assistance (confidential)

Question 40

what are the 7 voluntary job related services

Answer 40

1. subsidized childcare
2. eldercare
3. subsidized transportation
4. food servies
5. educational subsideies
6. family friendly benefits
7. exec perks